With the launch of Motorola Mobility's new Moto X, Google Inc (NASDAQ:GOOG) becomes the first tech company to be able to stamp "Made in the U.S.A." on a smartphone. While it's not the first tech product to have its manufacturing "onshored," it is the first smartphone and with that comes some benefits for consumers, such as being able to order and receive custom designs within days.
There was a lot of concern whether Google Inc (NASDAQ:GOOG) would be able to keep its manufacturing costs under control, since that was one of the reasons behind Apple Inc. (NASDAQ:AAPL), Dell Inc. (NASDAQ:DELL), and Hewlett-Packard Company (NYSE:HPQ) sending responsibility for assembling their products overseas. While it also made sense because of the network of components suppliers that were domiciled in Asia, it can't be denied that labor costs were a big factor, and China in particular had a large and willing workforce for the task.
Yet a new review by the market researchers at IHS Inc. (NYSE:IHS) found that the Moto X has a bill of materials that are comparably priced with foreign-sourced smartphones that could herald a return of tech manufacturing jobs to American shores.
In its report, IHS says that after tearing down the Moto X, the preliminary total BOM is just $214, which combined with $12 in manufacturing costs, gives the smartphone a total cost to produce of $226, smack in the middle between Apple Inc. (NASDAQ:AAPL)'s iPhone 5 at $207 and Samsung's Galaxy S4 at $237.
To keep its price low, Google Inc (NASDAQ:GOOG) apparently hasn't blazed many trails in design or hardware, but functionality remains comparable with foreign-sourced rivals and use of popular, readily available components like chipsets from QUALCOMM, Inc. (NASDAQ:QCOM), which are currently in high production, means costs are kept to a minimum.
IHS goes on to say that with a retail price between $540 and $580 and carrier subsidies around $300, the Moto X is on the prowl for grabbing attention with wireless carriers who typically subsidize Apple Inc. (NASDAQ:AAPL) and Samsung to the tune of $400 per smartphone.
The news reflects something of a trend among tech companies to repatriate jobs to America. Apple Inc. (NASDAQ:AAPL) announced last year that it would be producing some Macs in the U.S. and Google Inc (NASDAQ:GOOG)'s own failed Nexus Q was made here. Even Chinese computer maker Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) has said it will begin producing ThinkPads in the Land of the Free.
While the "Made in the U.S.A." label gives manufacturers some marketing heft to their products, the real reason for this sudden shift in focus could be that China is no longer the attractive economy it once was. Based on its success in recent years -- it surpassed the U.S. in 2010 as the world's largest manufacturing muscleman -- wages are rapidly rising, up 14% in 2012 and another 10% so far this year. Apple Inc. (NASDAQ:AAPL)'s assembler in China, Foxconn, hiked wages anywhere from 16% to 25% in April.